Bean Marketing in Uganda - Uganda Strategy Support Program Notes

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from wholesale to retail level is 49% as compared to only 24% for the private seed traders. This is a reflection of the efficiency of the private input traders as compared to the quasi-government USP. Difference between sale and purchase price: Table 40 and 41 present the percentage increase from purchase price to sale price. The increase reflects the competitiveness of the input market in Uganda and the transaction costs. In a competitive and efficient market system, the price difference between purchase and sale prices would be small because transaction costs and markup price 3 are lower. In a less competitive and/or inefficient market, transaction costs and markup price are likely to be higher. Table 40 and 41 are computed using the following formula: Ps − Pp d = p p where Ps is sale price, Pp is purchase price and d = is the proportion of difference between sale and purchase price. It is interesting to note that d is highest in the central region for beans, maize, and agrochemicals. It was expected that d in the central region would be lowest because respondents in the region operate in a much developed communication and transport infrastructure and hence lower transaction costs. Additionally, the number of input traders in the region is much higher than the case for other regions, implying a more competitive environment, hence lower markup. The higher d for the central region may 3 A markup is defined as: markup = MC/(1-1/e) where MC is marginal cost and e is demand elasticity. 13
e a result of the presence of the oligopolistic importers and wholesalers. Most wholesalers and importers sampled were in the central region. With the exception of vegetables, wholesalers reported higher d than retailers for all inputs reported in Table 40. Since importers and wholesalers are few, they are likely to set higher markup prices than retailers. The eastern region reports the lowest d for most of the inputs reported, implying a more competitive input pricing. This is probably because of the proximity of the region to the more competitive Kenyan input market. Profitability of input businesses: Table 42 shows that importers get the highest gross and net profit and the marginal rate of return. Importers’ gross and net profit is about twice that of wholesalers and ten times that of retailers. 4 The marginal rate of return (MRR) measures the returns that an investor gets back per unit invested. For example, MRR of 20% implies that for each Ush invested, the investor gets back Ush 0.20 on top of the unit Ush invested. As expected, the MRR for importer and wholesalers is higher than that of retailers. The probable reason is that importers and wholesalers are few in Uganda and hence have some degree of price control in the input trade. For the importers and wholesalers, the MRR is 0.23 and 0.17 respectively, implying that for each Ush they invest in input trade, importers get back Ush 0.23 and wholesalers get back 0.17 as compared to Ush 0.04 for retailers. There is a considerable degree of competition at the retail level as there are many input retailers in the country, hence the low MRR. 4 Gross margin (GM) = Revenue – purchase value (purchase price*purchased quantity). Net Profit (NP) = GM – operating costs (excluding purchase value) 14
Page 1 and 2: Bean Marketing in Uganda: Constrain
Page 3 and 4: cost in turn results from the high
Page 5 and 6: Kampala (Table 1). Twelve of the 17
Page 7 and 8: activity. The main types of occupat
Page 9 and 10: use of this variety could be attrib
Page 11 and 12: 1500 tons of maize seed and 1000 to
Page 13: complaints about bad quality. Over
Page 17 and 18: Access to telephone and other infor
Page 19 and 20: social capital since they did not r
Page 21 and 22: default rate in the west. On type o
Page 23 and 24: health risks. They may also not be
Page 25 and 26: therefore they need to attend a cou
Page 27 and 28: in the number of agricultural input
Page 29 and 30: NGOs such that they do not attach c
Page 32 and 33: REFERENCES Abbott, J.C. 1993. “Fi
Page 34 and 35: Nkonya, E.M. and E. Kato, 2001. Inp
Page 36 and 37: Table 5: Gender, Age and education
Page 38 and 39: Table 13: Type of transportation us
Page 40 and 41: Cash/Credit price ratio - 0.95 0.92

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